We think fears over escalating US inflation may in fact be put to rest today – with the latest CPI figures set to show headline inflation staying rooted around 2.2-2.3% YoY (largely an oil price and base effects story), while importantly the core reading is expected to print unchanged at 1.8% YoY. Indeed, after the low wage inflation reality check in the Feb US jobs report, bond market bears may for now find little evidence in a benign US inflation backdrop to justify adding to short positions. Moreover, with the Fed tightening cycle all but perfectly priced into the US curve, there may be very little positive $ signals for markets to extract from today’s CPI report – beyond confirmation of a late-cycle US economy.”

“USD/JPY continues to trade directionless in the near-term – with yen strength stemming from the political scandal involving the Japanese FinMin Aso proving to be fairly short-lived. The consensus narrative now seems to have joined us in calling for USD/JPY to move to 100 –the speed at which we get there (and whether we undershoot this level) depends on US trade policy.”

source https://www.fxstreet.com/news/us-inf...g-201803130912